A Guide for CaregiversSmall Group Seminars

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Small Group Seminars

Welcome to Money Matters for Caregivers!

Helping your loved one be more independent and confident in handling everyday money management, like banking and budgeting, is something all caregivers try to do.

And that’s great – but as a caregiver, you have your own financial concerns. How can you assist with your loved one’s special expenses? How can you plan for their support when you are no longer able to be a caregiver? How independent can they be in financial matters, and where will they need assistance?

That’s where this workbook comes in. It is designed to help you think through your options and make a plan, so your loved one will be as financially secure as possible – now and in the future.

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Have you spoken with your relative about your current financial situation, or their care in the future? What about your other family members? There is a lot to consider!

• How dependent or independent is your relative?

• What is their income? How able are they to manage their own money?

• What is their living situation, and how might that change in the future? What would they prefer?

• Are there other family members who are able and willing to provide care if you are not?

• Do you currently provide financial support to your loved one? Will you have enough income when you retire to continue this support? Will there be any money to leave for them after you die to support them?

If you are not sure how to provide for your loved one’s future, you are not alone. Although every family’s situation is different, many caregivers share similar concerns.

1. Important Conversations

Meet Fin Finn will retire in 15 years and worries about supporting his adult son, Sam, once his own income is reduced. His son lives in a group home and his disability allowance covers his most basic needs. However, Finn still pays for many of his son’s extra costs, including items like hearing aids and Sam’s cell phone bill. He has heard of the Registered Disability Savings Plan and wonders if that might be a way to save some money for Sam’s future.

Registered Disability Savings Plan (RDSP) is a long-term savings account for people for people with disabilities. The money grows tax-free, and depending on your other income, the government also contributes money.

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Meet Elena and AlphonseElena and Alphonse are aging, and realize that they will only be able to care for their daughter Mara for a few more years. Their other daughter, Alice, is 35 years old and has assured them that she will take on Mara’s care when they can’t — but they have never talked in detail about what that means. Will Mara actually be able to live with her sister? If not, where could she live and what will it cost? Elena and Alphonse haven’t looked into how their power of attorney can be transferred to Mia, and they haven’t showed her all the programs and supports that need to be maintained to provide for Mara. It’s time, they realize, to talk to both daughters, research the options, and start involving Alice more in Mara’s care.

Where are you starting from?Check the statement that sounds most like you:

o I have made plans with and for my loved one and I am confident they will be financially secure after I’m gone.

o I have taken some steps to plan for my loved one’s financial future, but I still have a lot of questions and concerns.

o I worry about my loved one’s future, but I am not sure what I can do to improve the situation.

o None of the above. Here’s my situation:

Power of Attorney is a document that allows one or more trusted relatives to make either health-care or property decisions on your behalf if you are not able to do it yourself.

It’s important to include your family member who has a disability in your planning as much as they are able. You may not agree on everything or be able to meeet all of their requests, but if you start by understanding what is important to your loved one, you can aim in that direction.

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Creating a spending plan for your loved one starts with knowing what their income and assets are, and how they spend their money. It’s important to plan for both regular monthly expenses and special bigger items.

Once you know just how much your family member needs now, and how much they actually have, you’ll be better able to make a plan for the future. You may need to track every expense for a few months to get a really clear picture.

2. Spending Plans

Creating a spending planStep 1 – Basic Expenses

On the next page, write down everything you have spent money on for your loved one in the last month. Include any expenses that they cover themselves. Some common expenses could be: • rent• cell phone• internet

List these under Basic Expenses.

Assets are a person’s savings and other possessions that can be turned into cash, such as a house or vehicle.

Income is the money you make.

Step 2 – Occasional Expenses

Now think about expenses that aren’t as regular but that would still be considered a need. This could be things like:• glasses• hearing aids• wheelchair upgrades• assistive software

List these under Occasional Expenses.

Step 3 – Extra Expenses (Wants)

Now think about items your loved one enjoys and wants to have, but doesn’t absolutely need.

List these under Extra Expenses.

• food• personal items, like shampoo and clothing• transportation

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Spending Plan Worksheet

Item

Item

Item

Amount it costs each month

Amount it costs each month

Amount it costs each month

Basic Monthly Expenses (Needs)

Occasional Expenses (Needs that occur less often)

Extra Expenses (Wants)

Add up whatever you or your relative spent on these major expenses over the last few years and then divide by 12 to come up with a monthly figure. It’s important to save this amount of money each month so that when these expenses arise, there is money to pay for them.

While it is important to be careful about spending too much on wants, keep in mind that they can be very important for quality of life.

Total Monthly Expenses:

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Step 4 – Income

Now let’s look at sources of income. Write down any income your loved one has coming in each month. This could include:

• wages or salary from employment

• government benefits

• money provided by family members, like a spending allowance

Type of Income Amount

Monthly Income

Total monthly expenses?

Total monthly income?

How am I doing? Income – Expenses =

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Now that you have a clear picture of your relative’s finances, you can look ahead to the future:

• If their expenses stay the same, will their income cover their needs? If not, how much more money is needed?

• What expenses might increase (rent? medical/assistive needs? assistance with daily personal care?)

• Do they have any assets (savings, trust fund, Registered Disability Savings Plan)?

In the next few pages, we will look at steps you can take to ensure your loved one is as well provided for as possible.

Planning for the future

A trust fund is money that belongs to one person but is legally held or managed by another person or by an organization

Notes

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There are a number of government benefits and tax credits that you or your loved one may be entitled to. .

3. Government Benefits and Tax Credits

Disability Tax Credit (DTC)This is a tax credit that helps people who have a disability to pay less income tax. It can also help their spouse or parent, if that person is responsible for paying the costs of their loved one’s care. To qualify, there must be a severe and long-term disability that seriously limits the basic activities of daily living.

To apply, a document from the Canada Revenue Agency called “Form T2201” must be completed. This form asks for details about the disability and must be completed by a medical doctor.

A government benefit is money paid by the government to an individual who requires additional financial support

A tax credit is an amount of money that is subtracted from the taxes you owe so the total amount of income tax you have to pay is less.

Qualifying for this tax credit can open the door to other benefits or programs, so it’s important to apply even if you don’t need the tax break.

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Child Disability Benefit (CDB)If you care for a child under 18 who qualifies for the Disability Tax Credit, you can also apply for the Child Disability Benefit. This is a tax-free payment of up to $2,730 per year, which you would receive in monthly payments. This is in addition to any money you may already be receiving for the Canadian Child Benefit.

Are you just finding out about the Disability Tax Credit and the Child Disability Benefit? If you qualify, the government will pay any money you are owed from the past 10 years. Contact the Canada Revenue Agency to find out more.

Canada Caregiver Credit (CCC)This is a fairly new tax credit. You can qualify if you have a relative of any age who has a physical or mental disability and relies on you for all or some of the costs for the basic necessities of life. The amount of the tax credit varies according to your relative’s income.

There is no application form for this credit. You claim it on your tax return. The Canada Revenue Agency may ask you for a signed document from your relative’s doctor that describes:

• the details of your relative’s illness, injury or disability

• the type of care your relative requires

• the length of time your relative will require care

Notes

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Where to find more information

You can find details on the Disability Tax Credit, the Child Disability Benefit, and the Canada Caregiver Credit, by typing the program name into a search engine (like Google). The first item to appear will likely be from the Government of Canada website. There you will find an explanation of the rules for each program, a section of Frequently Asked Questions, and links to any required forms.

If you need help completing the forms, your loved one’s case worker, social worker, or doctor’s office might be a good place to start.

To ensure your income tax return includes all the tax credits and benefits you should receive, consider having a tax professional handle the paperwork for you.

File your taxes! To qualify for government tax credits and benefits, your tax returns must be up to date.

Notes

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If your relative qualifies for the Disability Tax Credit, you can open a Registered Disability Savings Plan (RDSP) on their behalf. This is a great way to save for the future, for three reasons:

1. The government contributes money to the plan. Depending on your income, the Canadian government will contribute up to $3 for every $1 you contribute.

2. Even if you can’t afford to put much or any money into the RDSP yourself, the government will deposit a Canada Disability Savings Bond of up to $1,000 a year to those who have a low income until the RDSP owner reaches age 49.

3. People who receive provincial disability benefits can use money from their RDSP without affecting their disability payments or federal disability benefits.

4. Saving for the future: The Registered Disability Savings Plan (RDSP)

A Canada Disability Savings Bond is an amount of money paid by the Government of Canada directly into an RDSP.

Did you know? Provincial disability benefits programs are designed to support people who can’t support themselves financially, so there are limits on the assets they may own and still receive payments.

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Meet the MortonsThe Morton family opened an RDSP for their son Brady and paid in $1,000 a year for 20 years. Their family income is under $83,000, so the government adds in $1500 for the first $500 they deposit, and $1,000 for the next $500. So the government can add a total of $2,500 each year.

Their total savings:

$1,000/year X 20 years = $20,000

$2,500/year X 20 years = $50,000

Total: $70,000 + interest earned

Meet the SotarisThe Sotari family opened an RDSP for their adult daughter Jaspreet, aged 21. They contributed the same amount as the Mortons: $1,000 a year for 20 years. Because their daughter’s income was less than $24,000, she also qualified for an annual Canada Disability Savings Bond.

Their total savings:

$1,000/year X 20 years = $20,000

$2,500/year X 20 years = $50,000

$1,000/year X 20 years = $20,000

Total: $90,000 + interest earned

Sound too good to be true?

How it grows

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There is a catch. The RDSP is designed for long-term savings. The government stops contributing money when the account holder reaches age 49. You are supposed to wait 10 years after the last government payment to start taking out the money. That means the RDSP owner can’t withdraw any money from their RDSP until they are 60 years old. However, at age 60 they will receive monthly payments from the account and can also take out lump sums as needed.

They can withdraw money earlier, but if they do the government will take back its matching contributions from the last 10 years.

Different rules about when you can take out funds apply for people with a shorter life expectancy.

Yes, it’s complicated!

You can open an RDSP at most banks. Talk it through with whoever is helping you and make sure you really understand the rules.

Remember:

• If you have a low income and can’t make any contributions, you are still building up extra savings for your loved one’s senior years.

• If you do add your own money to the fund, that is saved money that your relative can use at any time without affecting their disability benefits. They will lose some of the government contributions if they use the money too early, but at least the money you contributed is there if they need it.

Learn more about RDSPs

http://www.rdsp.com

This site has a lot of information on RDSPs, including:

• an online tutorial and list of major banks offering RDSPs

• a downloadable guide to opening and managing an RDSP

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If you were to die suddenly, who would care for your dependent family members? What would happen to your house, your savings, your life insurance money? Who would ensure your wishes were followed?

The document where you list the answers to questions like these is called a will. Even if you don’t have a lot of money, it’s important to have a will. It’s especially important if you have family members who rely on you for care or financial support.

Without a legal will, you can’t be sure that the plans you’ve made for and with your family members will be followed. Instead, the court will appoint an estate trustee, who will divide your assets for you by following the set rules of law in your province.

5. Making Your Will

A will is a legal document in which a person states who should receive his or her possessions after he or she dies.

An estate trustee is someone you choose to ensure your will is followed after you die. This person can also be called an executor.

Assets are a person’s savings and other possessions that can be turned into cash. A car or a house is an example of an asset.

Notes

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How to make your will

What your will covers

Wills can be complicated, especially if you have a family member with a long-term disability to plan for. While it is possible to hand-write your own will, it is worth spending the money to have a lawyer prepare it for you. A lawyer can make sure that you have included all the needed details and give you advice.

Your will describes how your estate will be divided. Your estate includes any money you have saved or invested, and any possessions you have that could be sold for cash, like vehicles or property.

An estate is the total of a person’s possessions after they die.

Who will be your estate trustee? An estate trustee is the person you name as responsible for making sure your will is followed. That person has a long list of duties, including:

• letting the government, banks and others know of your death

• gathering information about your assets

• deciding how to cover expenses and provide for any dependents while the will is being settled

• paying off your debts

• filing your final income tax return

• giving any beneficiary their share of the estate

Your estate trustee will also set up any trusts that your will specifies. (See the next section to read more about trusts.)

Your estate trustee should be a trustworthy person who is well organized and good at dealing with money and paperwork.

These are a few of the questions your will should answer

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Who will care for your minor children?You can appoint another person to have custody of your children if you die before they reach adulthood. This takes effect right away if you die, but the person must then apply for permanent custody. While it’s possible for someone else to challenge the will and apply for custody, your wishes will likely be respected.

A dependent is a person who relies on you for financial support and/or physical care.

A beneficiary is a person that receives money or property when someone dies

Do you want to set up a trust fund for your relative with a disability? A trust fund is a way to leave a sum of money to someone that is managed by another person or organization (like a bank). With a trust fund, you are able to give instructions as to how the money should be spent.

Make sure the people you choose to be your estate trustee or to take care of your dependents understand what is involved and agree to do it.

Notes

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If you will be able to leave some money for your relative with a disability after you die, you may want to leave it in a trust fund.

6. Thinking about Trust Funds

A trust fund is money that belongs to one person but is legally held or managed by another person or by an organization, like a bank.

Questions to ask yourself before setting up a trust fund:• Does your relative qualify for provincial disability benefits, or are they

likely to in the future?

• Does your relative qualify for the Disability Tax Credit?

• Is your relative capable of managing their finances independently?

Types of trust fundsThere are two main types of trust funds to consider when planning to leave money to a loved one to cover the costs of their care:

• Inheritance Trust Fund

• Henson Trust Fund

The chart on the next page outlines the key differences between them.

Notes

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Trust Funds

Type of trust fund

What does it allow

What’s good about it

What’s not so good about it

Inheritance Trust Fund

Henson Trust Fund

An Inheritance Trust Fund allows you to leave up to $100 000 to a person receiving disability benefits.

A Henson Trust Fund allows you to leave more than $100 000 to a person with a disability.

It is unlikely to affect a person’s ability to continue receiving disability benefits.

The trustee can only use the money to support the person living with a disability.

You can leave instructions as to how the funds will be used.

It does not affect a person’s ability to receive disability benefits.

It protects your relative’s future financial security.

Not all provinces allow persons receiving disability benefits to have inheritance trusts.

The trustee has the power to decide whether to provide money to your relative or not. You have to have absolute trust in the chosen trustee.

Again – it’s complicated! An experienced financial planner can help you learn the rules about trusts in your province or territory, and guide you towards the right option for your family.

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Disability benefits are intended to help people who not only have a disability but also cannot financially support themselves. If your relative has too much wealth, they will not qualify to receive disability benefits. Both income and assets are taken into account.

Qualifying for disability benefits often means that health care costs like prescriptions and dental care are covered as well, so there are benefits beyond the amount of the monthly payment.

Some assets and gifts are exempt. That might include the home that the benefits recipient lives in or money used to pay for approved items or services related to the disability.

As the amount of assets you can own and still receive disability benefits is different in every province and territory, make sure you know the limit where your loved one lives.

Key notes about disability benefits and assets

Notes

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Choosing a Trustee

Qualities of an ideal trustee

o They understand and care about your relative’s well being o They understand your will and why you created a trust o They will take time to understand the rules around disability benefits

and how payments from the trust could affect these benefits o They will invest the money carefully o They will keep good records and make sure tax returns and reports to

the government are done properly o They know when and how to get professional advice o They make smart decisions and understand how to manage money o They will manage the trust with your relative’s best interests at heart

What other qualities might you look for in a trustee? Think about your loved one and the type of person who would be a good match. List any thoughts below.

If you do not have family or friends you are comfortable naming as trustees, there are trust companies, lawyers and accountants who provide this service. The cost for this service can be high. If this is an option you wish to consider, research the company carefully and make sure you fully understand the contract before you sign it.

For both kinds of trusts, and especially for the Henson Trust, it’s important that you have trustees who you are confident will put your relative’s best interests first.

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Learn more about trusts and wills

The following two resources are both Ontario-based, but they are very comprehensive guides to estate planning and trusts. Most information will apply across Canada.

• Inspiring Possibilities Estate Planning Guide, by Community Living Ontario www.PlanInspiringPossibilities.ca

• Consider a Henson Trust: What you can do to enhance the quality of life for a family member with a disability, by Autism Ontario

https://www.autismontario.com/client/aso/ao.nsf/docs/.../$file/henson+info.pdf

Notes

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When planning for your relative’s future financial well-being, a key question is whether they are able to understand and manage their own finances. This is called capacity.

According to the law, all adults have the capacity to make financial decisions for themselves, unless they have been found not capable. Capacity is generally decided by a doctor, though lawyers may assess capacity to make a will or assign Power of Attorney.

Capacity means:

• They are able to understand and remember information that’s important to the decision

• They are able to understand the probable consequences of their decision

Making a poor decision or one that others might find foolish does not prove lack of capacity. We all have the right to make unwise choices, as long as we understand those choices.

7. Capacity

When your loved one turns 18, you do not automatically keep the right to make decisions on their behalf. This is true even if you are a parent and they live with you.

My loved one:

o Is able to manage their money but, like anyone else, may need professional support for more difficult decisions or tasks.

o Handles day-to-day money management fairly well, but needs support with some tasks and decisions and needs someone to handle complex tasks like income tax returns.

o Is not capable of dealing with anything beyond very simple money matters and needs someone else to handle it.

Capacity is the ability to make decisions for yourself

How capable is my loved one?

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If your relative needs significant help with money management, you will need to research options in your province or territory. Some provinces have a supported decision-making option. This option allows for friends, family members and professionals to help with different parts of the decision-making process. Ask your relative’s case worker or your lawyer about this choice.

Another option is for your relative to assign Power of Attorney for Property to one or more trustworthy people. These people will then be able to act for your relative when your relative is not capable of doing so themselves. Your relative will need to demonstrate their capacity to understand and agree to this choice.

Supported decision making is a process where people with disabilities use friends, family members, and professionals to help them understand the situations and choices they face, so they may make their own decisions without need of a court appointed guardian.

Power of Attorney for Property is a document that gives permission for a trusted relative(s) to make financial decisions on your behalf.

Notes

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Now that you know more about what’s involved in providing for your loved one’s future, do you feel ready to move forward and make a plan?

What might be the easiest part of making this plan?

What seems like the hardest part?

What do you need to learn more about?

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8. Making a Plan

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Who do you need to consult with?

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What is one goal that you can get started on this week?

What steps do you need to take to achieve it?

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2.

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Who do you need to get help from?

Target completion date:

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You’ve completed Money Matters for Caregivers. That’s the first step to helping your loved one look forward to a secure future.

Please take a few minutes to fill out a short feedback survey at https://www.surveymonkey.com/r/DiverseAbilitiesCaregiverGuide2018.

Everyone who completes the survey will be entered into a draw to win a prize.

Congratulations!

We’d like to know what you think of this guide.

Notes

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GLOSSARY

assets a person’s savings and other possessions that can be turned into cash, such as a house or vehicle.

beneficiary a person who receives money or property when someone dies

capacity the ability to make decisions for yourself

Canada Caregiver Credit (CCC) a tax credit for someone who cares for a dependent relative with a disability.

Child Disability Benefit (CDB) a monthly payment from the government available to caregivers of children and youth who qualify for the Disability Tax Credit.

dependent a person who relies on you for financial support and/or physical care.

estate the total of a person’s possessions after they die.

estate trustee a person or persons chosen to ensure a person’s will is followed after they die. This person can also be called an executor.

Disability Tax Credit (DTC) a tax credit available for people with a severe and long-term disability (or their caregivers).

Henson Trust a trust fund that gives the trustee (or trustees) absolute discretion to make decisions about the money on behalf of the person benefitting from the trust. Because nothing is forcing the trustees to give the beneficiary the money, it is not considered part of the beneficiary’s assets. A Henson Trust can also be called a discretionary trust.

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income the money you make

Inheritance Trust a fund managed by a trustee (or trustees) that uses money left in a will to benefit one or more people.

Power of Attorney a legal document that gives one or more trusted relatives to make either health-care or property decisions on your behalf if/when you are not capable to do it yourself.

Power of Attorney for Property a legal document that allows one or more trusted relative(s) to make financial decisions on your behalf.

Registered Disability Savings Plan (RDSP) a long-term savings account for people with disabilities.

Registered Retirement Savings Plan (RRSP) a long-term savings account to provide income when you retire

supported decision making a process where people with disabilities use friends, family members, and professionals to help them understand the situations and choices they face, so they may make their own decisions without need of a court appointed guardian

tax credit an amount of money that is subtracted from the taxes you owe

trust fund money that belongs to one person but is legally held or managed by another person or by an organization, like a bank

will a legal document that explains how you wish your estate to be divided up after your death.

Notes

Thank you for participating in the Money Matters for Caregivers program

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